Record Close for S&P 500 Fueled by Tech Boom, Netflix Exceeds Revenue Expectations
By April Fowell
- Tech stocks, including Microsoft and Meta, lead as S&P 500 marks fourth consecutive record close.
- Nasdaq Composite rises initially, settling up around 0.4%, while Dow Jones dips 0.3%.
- Netflix's impressive Q4 subscriber additions, exceeding estimates, drive shares up 14%, reaching $8.83 billion in revenue.
On Wednesday, markets concluded in a mixed bag, with tech stocks leading the way as the S&P 500 recorded its fourth consecutive record finish. The surge in technology stocks also aligns with ongoing expert forecasts regarding the transformative impact of Artificial Intelligence (AI).
The sustained success of the tech sector not only mirrors current market conditions but also the forward-looking projections by industry experts and analysts who anticipate that AI technologies will play a crucial role in shaping the future of various industries.
After rising more than 1% early in the day, the Nasdaq Composite saw gains taper down to settle up around 0.4%. Prominent IT heavyweights like Microsoft and Meta also had increases in their stock, and strong earnings led by Netflix helped support the index.
The Dow Jones Industrial Average (^DJI) dipped about 0.3%, while the S&P 500 finished flat but nevertheless set a new closing high.
In the meantime, spectacular upgrades from software provider SAP (SAP) and semiconductor gear manufacturer ASML (ASML) raised hopes for a resurgence of the chip sector and an AI-driven tech boom.
The star of the flurry of corporate results on Wednesday, Tesla (TSLA), the Magnificent Seven laggard, reported lower-than-expected earnings as the electric vehicle manufacturer deals with a competitive market and formidable Chinese rivals. The need for AI drove 4% of sales growth last quarter, according to IT giant IBM (IBM).
While results take center stage, there is ongoing discussion about when the Federal Reserve may lower interest rates.
Just in front of Thursday's initial reading of Q4 GDP and Friday's publication of the Fed-favored PCE inflation statistics, updates on US manufacturing and services activity came in strong, with economic production at its highest levels in seven months. This was expected given the data fueling expectations.
Netflix Subscribers Surge
Netflix's shares jumped as much as 14% in early trading on Wednesday after the company said on Tuesday that its fourth-quarter subscriber additions exceeded its own estimate.
With 13.12 million new subscribers, Netflix has surpassed its own projection of about 9 million, with net additions for the entire year 2023 estimated to be above 30 million. In Q4 2022, the firm added 7.67 million paying users.
The streamer relied on revenue initiatives like its crackdown on password sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans, to reach $8.83 billion in revenue in the quarter, beating Wall Street estimates of $8.71 billion. This represents a 12.5% increase over the same period last year.
Netflix predicted first-quarter revenue of $9.24 billion, which was about in line with the $9.28 billion consensus estimate.